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Basis Principles (Inherent Powers)

1. Taxation.
a.

Taxation is the act of laying a tax, i.e. the process or means by which the sovereign, through its lawmaking body, raises income to defray the necessary expenses of government.
Purposes of Taxation

1) The principal (primary) purpose is to raise revenue for governmental needs. This is also called 2)
revenue purpose. The secondary purposes of taxation are: a) Compensatory purposes

a. To reduce excessive inequalities of wealth b. To maintain high level of employment c. To control inflation b) Sumptuary or regulatory purpose -To implement the police power of the State
to promote the general welfare.

b.

Theory and Basis of Taxation

a. The power of taxation proceeds upon the theory that the existence of the government is a necessity, that it cannot continue without means to pay its expenses and that for this means it has a right to compel all its citizens and property within its limits to contribute.
b.

The basis is the reciprocal duties of protection and support between the State and its citizens. The State collects taxes from the subjects of taxation in order that it may be able to perform the functions of government. The citizens on the other hand, pays taxes in order that they may be secured in the enjoyment of the benefits of organized society (benefits received theory)

c.

Lifeblood Theory

a. Taxes are the lifeblood of the Government and their prompt and certain availability are imperious (expecting obedience) need.
b. c. Upon taxation depends the governments ability to serve the people for whose benefit taxes are collected. Manifestation of lifeblood theory: 1) Imposition of tax even in the absence of Constitutional grant. 2) Right to select objects of taxation.

3) No injunction to enjoin (or stop) tax collection d. e.

Scope of the Power of Taxation. The power of taxation is comprehensive, plenary, unlimited and

supreme. This power is, however, subject to inherent and constitutional limitations.
Characteristics (or Nature) of the State's Power to Tax

a. It is inherent in sovereignty, hence, it may be exercised although not expressly granted by the Constitution. b. It is legislative in character, hence, only the legislature can impose taxes (high prerogative of sovereignty).
c.

It is subject to Constitutional and inherent limitations , hence, it is not absolute power that can be exercised by the legislature anyway it pleases.

f. g.

Processes included or Embodied in the Term Taxation

a. Levying or imposition of tax which is a legislative act. b. Collection of the tax levied which is essentially administrative in character.
Matters within the Competence of the Legislature to Determine

a. b. c. d. h.

The subject matter or object to be taxed. The purpose of the tax so long as it is a public purpose. The amount or rate of the tax.
Manner or means of collecting taxes

Basic Principles of a Sound Tax System (Canons of Taxation)

a. Fiscal Adequacy- This means that the sources of revenue should be sufficient to meet the
demands of public expenditures.

b. Equality or Theoretical Justice- This means that the tax burden should be proportionate to the
taxpayer's ability to pay (ability to pay principle). and effective administration.

c. Administrative Feasibility -This means that the laws should be capable of convenient, just

2. Inherent Powers of the State

a.
Inherent powers

1) Taxation - The power by which the sovereign raises 2)

revenue to defray the necessary expenses of the government. Power of Eminent Domain - The power of the State or those to whom the power has been delegated to take private property for public use upon paying the owners a just compensation to be ascertained according to law

Basic Principles (Inherent Powers)

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3) Police Power T h e power of the State to enact such laws in relation to persons and property as b.
may promote public health, public morals, public safety and general welfare of the people.
Similarities Among the Three Inherent Powers

1) They are inherent in the State; 2) They exist independently of the Constitution; 3) They constitute the three methods by which the State interferes with private rights and property; 4) They are legislative in nature and character;
5) Each presupposes an equivalent compensation

3. Distinction Among the Three Inherent Powers

a.
As to authority which exercises the power

Taxation Police power

Power of eminent domain

Government only
Government only Government, public service companies and public utilities

b.

As to Purpose

Taxation Police power

Power of eminent domain

Support of government Promote general welfare

Public purpose

c.

As to Persons Affected

Taxation Police power Power of domain d.

As to Effect

Community or class of individuals Community or class of individuals eminent Individual as owner of a particular property Taxes become part of public funds No transfer of title, there is restraint on the injurious use of property eminent There is transfer of the right to property, either ownership or a lesser right Equivalent of tax in the form of protection and benefit No direct and immediate benefit, only such as may arise from the maintenance of a healthy economic standard of society (damnum absque injuria or damage without injury) eminent Market value of the property taken from him No limit Limited to the cost of the license and the necessary expenses of police surveillance and regulation eminent No imposition, the owner is paid the fair market value of his property Inferior to the clause Superior to the clause eminent Inferior to the clause

Taxation Police power Power domain e. Taxation Police power of

As to benefits Received

Power domain f.

of

As to Amount of Imposition

Taxation Police power Power domain g. Taxation

Police power

of

As to Relationship to the Non-Impairment of Obligation Clause of the Constitution

Power domain

of

Basic Principles (Inherent Powers)